Business model of Battersea Power Station flawed

The business model of the development of the Battersea Power Station is flawed. It only needs a slight shift in interest rates or property taxes, or for the value of the pound to rise relative to Asian currencies for the foreign investor led property market boom to collapse according to Bloomberg.

tulip

It is this flawed and precarious property bubble that Transport for London (TfL) is sinking billions of pounds of public money to prop up.

At the recent public inquiry into the Northern Line Extension the response from the representatives of TfL to the many compelling arguments against the scheme made in Battersea Power Station Community Group’s objection was to insist the NLE was not aimed at solving local transport infrastructure issues but to enhance property values in the so called Vauxhall Nine Elms Battersea Opportunity Area.

In this time of austerity can this really be a good use of public money? It is also probably one of the most useless, unwanted and extravagant public infrastructure projects ever proposed.

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London’s status as a magnet for foreign property investment was burnished in the years after the financial crisis by an investor-friendly tax regime and the falling value of the pound. That may be changing.

A new capital-gains tax on homes sold by people living abroad and a growing British economy that’s lifting the currency may dull the capital city’s appeal to property buyers from abroad. Chancellor of the Exchequer George Osborne announced the new capital-gains tax in a statement to Parliament on Dec. 5. It will apply to “future gains” after the tax goes into effect in April 2015, he said without specifying the size of the levy. Capital-gains tax rates for second homes of U.K. residents currently range from 18 percent to 28 percent. Labour Party leader Ed Miliband and Nick Clegg, head of the Liberal Democrats, which govern in a coalition with Prime Minister David Cameron’s Conservative Party, support an annual levy on houses valued at more than 2 million pounds known as the mansion tax. Cameron opposes the idea.

Other than that, South Asian buyers account for two-thirds of new London homes sold before completion, according to Land Securities Group Plc, the largest U.K. real estate investment trust. The high-end market is dependent on pre-sales to overseas buyers to help get development finance and deal with rising land costs, Michael Lister, a lecturer at University of Westminster, said in a Nov. 22 interview. Singapore and Hong Kong, two destinations also favored by south Asian buyers, have introduced measures to cool property prices and curb speculation. Singapore linked borrowers’ maximum debt levels to their incomes and raised transaction and capital-gains taxes. Hong Kong has increased minimum down payments six times in fewer than three years and in February doubled stamp-duty taxes for all properties over HK$2 million ($258,000).

To end with, the pound plummeted against a basket of major currencies after the collapse of Lehman Brothers Holdings Inc., making London homes a relative bargain for wealthy investors and buyers from emerging Asian economies. The Singapore dollar gained 60 percent against the pound from September 2007 to June this year and the Malaysian ringgit climbed by 50 percent. Since then, the pound has risen 6.8 percent and 12 percent respectively against the Asian currencies.

Farmer of EC Harris said:

“One of the key drivers around demand in that market, particularly from the Far East, has been the relative weakness of sterling over the last three or four years,”“The improving economy is good for U.K. Plc but it might make residential investment slightly less competitive or good value in the eyes of the international community.”

View the full article.

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Battersea Power Station only a place for the rich?

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Supposedly, Battersea Power Station is getting a new life. The vision is of a lively community where people can contact each other through their own social networks,  meet their neighbours in memberships clubs, small children  splash in a pool while their mums chat, shoppers cruise cafes and exclusive shops unique to the area- for some a nice vision.

A marketing person’s image of the perfect place to live, why would you ever want to move from one of the top five places in London? What can possibly be wrong with a community like this?

One problem can be that the first 800 flats are being sold off plan to rich people in Asia. Even if the plan is to build 3,500 new homes, when a forth of the houses are being sold to people who probably will not live there most of the time, will that really contribute to a lively neighbourhood?

An other question that needs to be raised is what is going to happen to the existing communities in Battersea? With luxury estates being built in the area, bringing expensive shops with them, the rents of the properties in the surrounding areas will probably be rise substantially. Especially if they succeed in building this community for rich people, the demand for apartments will rise and once again the rents will get higher.

With many people in the neighbouring estates, such as the Patmore estate, being low-income, a rent increase would be devastating. This would lead to most of the people being forced to move, but the question is to where? And is it really fair to force people who served and have been a part of a community to leave it just because of the effects from the luxury buildings across the road. Especially since almost a forth of the flats will not be sold to people in London who needs a place to live.

So one person’s idea of the perfect community is a nightmare for others.  Is it really worth the price? And do we really want to live in a world where some people are worth more than other just based on money?

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Loss of tax revenue is called negligible despite reduced funding for sports

The Government have now decided to grant a tax amnesty to overseas athletes who are to compete in London Grand prix in the Olympic stadium this summer. This to ensure that famous athletes, such as Usain Bolt, will come and compete.

Britain used to impose taxes on appearance fees and prize money for non-resident athletes who competed in any sports in the country. This tax has prevented Bolt racing in Britain since 2009, except for the summer olympics, because he thinks it is to expensive.

George Osborne, British treasury chief, agreed to the tax concession because it is important for the Olympic legacy. He also means that the loss of tax revenue is negligible compared the to the benefits for London and athletics.

It is interesting how the Government, who decided to reduce funding for connecting sports clubs and schools, and in some cases remove completely, funding for elite sports that do not have a chance of winning gold at the olympics, can afford to call a loss of tax revenue negligible.

Is the Olympic legacy only about getting athletic superstars to compete in the UK, or should it not about getting people active, especially children, in sports that interest them?

 

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Battersea Redevelopment Scheme

Wandsworth Borough Council recently acknowledged the dedicated hard work of six volunteers. See this article from the Council to read about these people. Their commitment is a shining example of the potential to locally promote the concept of opportunity.

That is in stark contrast to the proposed redevelopment scheme around Battersea Power Station. If the scheme is to go ahead the lowest sale price will be in the region of £700,000. It is not designed for local growth; for one, the average London resident cannot come close to affording the prices, and, secondly, the primary purpose is to attract eastern investors. Have a read of this article from the Architect’s Journal. Battersea is a borough proud of its heritage, including of course a long-standing association with the world famous power station. As the AJ article also highlights, local residents’ view of the power station will be severely disrupted. The redevelopment scheme, apart from damaging the view of the power station, will impose a mono-culture of gentrification resembling Canary Wharf.

London Mayor Boris Johnson hailed the scheme as the greatest source of growth in London since Canary Wharf. Indeed attracting foreign investment, as the scheme will likely do, would be of huge benefit to the financial district. However, it is difficult to see the economic benefits on a local level. Johnson stated his target of creating 25,000 jobs but any involvement in the development’s construction appears unlikely or low key since the corporate firms involved will bring in employees from exterior regions and any local work would merely be temporary. Ultimately, the scheme will work to spread the social divide that has been so horribly exposed in post-2008 Britain.

Anyhow, the scheme cannot progress in the first place without the long-planned extension of the Northern line to the Battersea power station. There is no doubt of the necessity to improve Battersea’s transport links and in recent days the matter has made headlines following Chancellor George Osborne’s announcement of a £1billion loan for the extension to happen. This, as we see it, is questionable. If the government had full confidence in the extension, would they not have made a direct investment, expressing their belief in the economic benefits that it should guarantee?

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Join the Atos Games with Disabled People Against Cuts

Join the Atos Games with Disabled People Against Cuts

Join Disabled People Against Cuts for The Atos Games From Monday 27 to Friday 31 August – five days of action against a company that’s sponsoring the Paralympics but wrecking disabled people’s lives.

We are calling on disabled people, disabled activists, families, colleagues, friends and supporters to come together and fight back against Atos’s attacks. Atos represents as dangerous an opponent as any government, law or barrier the disability movement has faced in its long history. It’s not just welfare, but our very identity and our place within society that is under attack.

We are asking the whole of the anti-cuts movement to join us in our opposition to the company most responsible for driving through the government’s brutal cuts agenda.

Let’s make it Games over for Atos!

We’re not against the Paralympics, or the people taking part in it. We’re highlighting the hypocrisy of Atos, a company that soon may be taking disability benefits from the people winning medals for Team GB.

Ever since George Osborne announced he was slashing £18 billion from the welfare budget, the government has paid Atos £100 million a year to test 11,000 sick and disabled people every week – then decide whether they’re ‘fit for work’.

Atos uses an inhumane computer program to do the testing and trains its staff to push people off benefits. The government has admitted the tests are flawed and the British Medical Association wants them to end immediately.

So – join in The Atos Games however you can – online, on the phone, or on the streets!

• Monday 27: A coffin full of your messages about Atos will be delivered to its doorstep.

• Tuesday 28: Pay a visit to your local Atos office – and maybe even take your protest inside!

• Wednesday 29: We’ll hold a spoof Paralympic awards ceremony – hopefully with some very special guests…

• Thursday 30: Phone jam! Let’s flood Atos with calls, and generate a Twitter-storm they can’t ignore!

• Friday 31: Join us in London where we’re teaming up with UK Uncut for the Grand Finale – an audacious, daring and disruptive action. Last time we shut down Oxford Circus. This time we will be performing miracles…!

We’ll give more details about each day of action. We’ll make sure that DPAC members and disabled people who can’t travel will be able to take part in different and accessible ways.

We’d really like YOU to make this week of action a great success!

Atos has offices in most towns across the country, so start organising an action for August 28 at your local Atos now!

Let the Atos Games begin.

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Battersea Power Station: Out of the frying pan into the fire

The horror story continues…

Nightmare on Nine Elm Street

The abysmal Vinoly plans for Battersea Power Station that we had all hoped were finally dead and buried with the collapse of previous owners REO has come back to haunt all who care about the beautiful building and the quality of life for all those living in its shadow and the surrounding area.

Just when you thought it was safe Architect Viñoly has been hired as “creative brain” behind developer Mike Hussey’s plan for a new stadium for Chelsea football club. AAAHHHHHHGGGGG……

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Your TV tonight: The undead Grey Men of Battersea Power Station

On ITV’s London Tonight and LBC radio you can watch or hear Ravi Govindia, the leader of Wandsworth Council who, as former cabinet member for “strategic planning and transportation”, is particularly responsible for the failed private-property owner led regeneration of the area,  trying to defend the borough’s pathetic policy towards the obviously flawed and greedy plans for Battersea Power Station.

Only a few days ago George Osborne and Boris Johnson were doing their best to puff the disastrous scheme which is now as all but dead and buried by the creditors calling in their loans.


For the Battersea Power Station Community Group (BPSCG) it is just another “new beginning” as the fourth developer limps off stage to boos and jeers.

Keith Garner is also interviewed calling for the whole site to be put into public ownership for a sensible, viable, gradual development of the historic and beautiful building and its surrounding site. An ideal exhibition for industrial power ( see our previous blogs). Keith cites the difference in the approach of Southwark to the other Gilbert-Scott designed river front power station, the highly successful Tate Modern. Through partnerships and a gradual, planned development it shows what Battersea residents could have had these past 30 years.

WATCH: ITV London Tonight on Battersea Power Station debt

Spectacle’s crew were there today too and will be posting soon the bits of the interviews the broadcaster left out. Including an hilarious episode where the owners try to stop ITV filming by shutting the gates. Perhaps their last act.

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Creditors call in Battersea Power Station debts

For Sale

 

NAMA and Lloyds  are owed 502 million pounds ($786 million) by the owners of Battersea Power Station and they want their money back. Now.

Despite REO’s attempt at positive spin (see below) their ridiculous plan is over and it is about time the heritage site was brought into public ownership and restored as a site for Industrial Power.

 

Real Estate Opportunities plc (the Company)
Battersea Power Station facilities:

The Company announces that certain subsidiaries (BPS Subsidiaries) of Battersea Power Station Shareholder Vehicle Limited, the holding company of Battersea Power Station formed for the purposes of the restructuring that was announced in April 2011 and which is 54% owned by the Company, have received demand for repayment from Bank of Scotland plc, as agent for the National Asset Management Agency (NAMA) and Lloyds Banking Group the (together the senior lenders), under the senior facilities advanced in respect of the Battersea Power Station site, aggregating approximately £324m, and from Oriental Property Limited under the facilities advanced by it to the BPS Subsidiaries, aggregating approximately £178m. The BPS Subsidiaries are currently not in a position to satisfy these demands for repayment.  The Company has also been advised that NAMA  and Lloyds Banking Group have applied to the English court for the appointment of administrators to certain of the BPS  Subsidiaries and that a hearing for this purpose is to be held on 12 December 2011.
The Company remains in discussions which may result in the disposal of the group’s interest in the Battersea Powerstation site and repayment of associated liabilities.  However, there is no certainty that any such transaction will be effected.
The Company’s other assets, which are situated in Ireland, are unaffected by the above developments. The Company has recently received term sheets from NAMA, the principal lender in respect of its Irish assets, indicating NAMA’s continued support for the Company’s business in Ireland.

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Why the Northern Line extension will never happen

The recent PR buff on Battersea Power Station has left us no closer to a solution to the issue. Chancellor George Osborne and Mayor of London, Boris Johnson, have been talking about the Northern Line extension and oligarch Roman Abramovich has received media attention by saying that he’s thinking about moving Chelsea Football Club‘s home ground South East of the site.

Extending the Northern line from Kennington to Battersea is one thing – funding the project is another. During the Autumn Statement in the Commons today, Osborne stated that the government will back the project – but did not mention with how much. He also called for “a developer” to contribute to the project and develop the power station site before a deadline of 2013.

The project is still heavily reliant on private funding and current owners Treasury Holdings is going to struggle. A scheme this size, roughly three times the size of Canary Wharf if you include Nine Elms, is always going to be difficult to get up and running at the best of times. But in a recession..?

Giving the Northern Line extension green light and talking up the moribund and equally fantastic Rafael Viñoly’s nightmare vision of gloomy glass canyons, is certainly invaluable property pump priming. And it’s hard to imagine why the Conservatives are so happy to collude in this theatre, given that they held their 2010 election campaign launch under the same chimneys which Battersea Power Station’s owner Richard Barrett, one of the co-founders of Treasury Holdings, once said “would fall in strong wind.”

Recently, Tory dominated Wandsworth Borough Council’s planning committee gave Treasury Holdings permission to demolish the power station’s chimneys on the grounds that they were unsafe. However, many experts disagree and local residents believe that, like the roof which was never replaced, the chimneys will never be re-built once they are gone. If Treasury Holdings really believe that the chimneys are precarious, it shows a very cavalier approach to the health and safety of Her Majesty’s Opposition, as there wasn’t a hard hat in sight.

The Battersea Power Station should become a World Heritage site for industrial power. The site has a unique Victorian Pumping Station with site of the biggest Cornish engine of its day. It also has spectacular gasometers dating from 1910 as well as, of course, the beautiful coal-powered art deco power station.

It would be nice to see Abramovich spend some of his heard-earned billions derived from oil, show some philanthropic decency and rescue the site from the clutches of the myopic grey men. They would simply turn the site into just another crass, desolated, windswept and empty river-front development along the banks of the Thames.

The Big Society was prime minister David Cameron’s flagship policy idea for the 2010 election campaign and has stated that it’s his “mission.” One may ask, if one of the world’s richest men isn’t going to chip in – then who will?

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